Book•
The balanced scorecard : measures that drive performance
17 Apr 2015-
TL;DR: A "balanced scorecard" is developed, a new performance measurement system that gives top managers a fast but comprehensive view of the business and complements those financial measures with three sets of operational measures having to do with customer satisfaction, internal processes, and the organization's ability to learn and improve.
Abstract: Frustrated by the inadequacies of traditional performance measurement systems, some managers have abandoned financial measures like return on equity and earnings per share. "Make operational improvements and the numbers will follow," the argument goes. But managers do not want to choose between financial and operational measures. Executives want a balanced presentation of measures that allow them to view the company from several perspectives simultaneously. During a year-long research project with 12 companies at the leading edge of performance measurement, the authors developed a "balanced scorecard," a new performance measurement system that gives top managers a fast but comprehensive view of the business. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements those financial measures with three sets of operational measures having to do with customer satisfaction, internal processes, and the organization's ability to learn and improve--the activities that drive future financial performance. Managers can create a balanced scorecard by translating their company's strategy and mission statements into specific goals and measures. To create the part of the scorecard that focuses on the customer perspective, for example, executives at Electronic Circuits Inc. established general goals for customer performance: get standard products to market sooner, improve customers' time-to-market, become customers' supplier of choice through partnerships, and develop innovative products tailored to customer needs. Managers translated these elements of strategy into four specific goals and identified a measure for each.
Citations
More filters
TL;DR: A review of the literature pertaining to the assessment of knowledge assets can be found in this article, where a variety of models have surfaced in an attempt to measure IC and this paper aims to highlight their strengths, weaknesses and operationalizations.
Abstract: This paper reviews the literature pertaining to the assessment of knowledge assets. Since knowledge assets are at the crux of sustainable competitive advantage, the burgeoning field of intellectual capital is an exciting area for both researchers and practitioners. Unfortunately, the measurement of such intangible assets is difficult. A variety of models have surfaced in an attempt to measure IC and this paper aims to highlight their strengths, weaknesses and operationalizations.
1,594 citations
Cites background or methods from "The balanced scorecard : measures t..."
...Other models that were not reviewed in this paper that are nevertheless worth examining include Standfield’s (1999) Knowcorp Audit, the Tobin’s Q ratio, the Balanced Score Card (Kaplan and Norton 1992) and a popular stream of research from the 1960s called Human Resource Accounting (Bontiset al. 1999; Brummetet al. 1968)....
[...]
...Other models that were not reviewed in this paper that are nevertheless worth examining include Standfield’s (1999) Knowcorp Audit, the Tobin’s Q ratio, the Balanced Score Card (Kaplan and Norton 1992) and a popular stream of research from the 1960s called Human Resource Accounting (Bontis et al....
[...]
...…reviewed in this paper that are nevertheless worth examining include Standfield’s (1999) Knowcorp Audit, the Tobin’s Q ratio, the Balanced Score Card (Kaplan and Norton 1992) and a popular stream of research from the 1960s called Human Resource Accounting (Bontiset al. 1999; Brummetet al. 1968)....
[...]
TL;DR: In this paper, the authors develop a sustainable-value framework that links the challenges of global sustainability to the creation of shareholder value by the firm and show how the global challenges associated with sustainable development, viewed through the appropriate set of business lenses, can help to identify strategies and practices that contribute to a more sustainable world while s...
Abstract: Executive Overview Just as the creation of shareholder value requires performance on multiple dimensions, the global challenges associated with sustainable development are also multifaceted, involving economic, social, and environmental concerns. Indeed, these challenges have implications for virtually every aspect of a firm's strategy and business model. Yet, most managers frame sustainable development not as a multidimensional opportunity, but rather as a one-dimensional nuisance, involving regulations, added cost, and liability. This approach leaves firms ill-equipped to deal with the issue in a strategic manner. Accordingly, we develop a sustainable-value framework that links the challenges of global sustainability to the creation of shareholder value by the firm. Specifically, we show how the global challenges associated with sustainable development, viewed through the appropriate set of business lenses, can help to identify strategies and practices that contribute to a more sustainable world while s...
1,492 citations
TL;DR: In this paper, an overview of what the authors believe to be every empirical research article into the linkages between HRM and performance published in pre-eminent international refereed journals between 1994 and 2003 is presented.
Abstract: This is an overview of what the authors believe to be every empirical research article into the linkages between HRM and performance published in pre-eminent international refereed journals between 1994 and 2003. The analysis covers the design of the study, including the primary level of analysis and the identity of the respondents; the dominant theoretical framework(s) informing the article; how HRM is conceived and operationalised; how performance is conceived and operationalised; and which control and/or contingency variables are incorporated. Finally, the article examines how each study depicts the so-called 'black box' stage between HRM and performance. It reports wide disparities in the treatment of these components, but also some welcome commonalities and indicative trends that point towards a gradual convergence on how future research into this complex relationship might usefully be conducted. The findings are compared with previous reviews of the literature. The analysis should illuminate the ongoing debate about the linkages between HRM and performance, and prove valuable for future research designs.
1,475 citations
TL;DR: In this article, the authors investigate whether there are conditions under which there are tradeoffs between customer satisfaction and productivity, and propose a conceptual framework useful in resolving these contradictory viewpoints, which serves, in turn, as a basis for developing a theoretical model relating customer satisfaction with productivity.
Abstract: There is widespread belief that firms should pursue superiority in both customer satisfaction and productivity. However, there is reason to believe these two goals are not always compatible. If a firm improves productivity by “downsizing,” it may achieve an increase in productivity in the short-term, but future profitability may be threatened if customer satisfaction is highly dependent on the efforts of personnel. If so, there are potential tradeoffs between customer satisfaction and productivity for industries as diverse as airlines, banking, education, hotels, and restaurants. Managers in these types of service industries, as well as goods industries in which the service component is increasing, need to understand whether or not this is the case. For example, if efforts to improve productivity can actually harm customer satisfaction---and vice-versa---the downsizing of U.S. and European companies should be viewed with concern. It follows that developing a better understanding of how customer satisfaction and productivity relate to one another is of substantial and growing importance, especially in light of expected continued growth in services throughout the world economy.
The objective of this paper is to investigate whether there are conditions under which there are tradeoffs between customer satisfaction and productivity. A review of the literature reveals two conflicting viewpoints. One school of thought argues that customer satisfaction and productivity are compatible, as improvements in customer satisfaction can decrease the time andeffort devoted to handling returns, rework, warranties, and complaint management, while at the same time lowering the cost of making future transactions. The second argues that increasing customer satisfaction should increase costs, as doing so often requires efforts to improve product attributes or overall product design.
A conceptual framework useful in resolving these contradictory viewpoints is developed. The framework serves, in turn, as a basis for developing a theoretical model relating customer satisfaction and productivity. The model predicts that customer satisfaction and productivity are less likely to be compatible when: 1 customer satisfaction is relatively more dependent on customization---the degree to which the firm's offering is customized to meet heterogeneous customers' needs---as opposed to standardization---the degree to which the firm's offering is reliable, standardized, and free from deficiencies; and 2 when it is difficult costly to provide high levels of both customization and standardization simultaneously.
To move forward from the model's propositions to the development of testable hypotheses, we argue that services are more likely than goods to have the preceding characteristics. Hence, tradeoffs between customer satisfaction and productivity should be more prevalent for services than for goods. Although this classification is not precise---many services are standardizable and many goods have a service component---it has the advantage of allowing an initial test of the propositions.
The empirical work employs a database matching customer-based measures of firm performance with traditional measures of business performance, such as productivity and Return on Investment ROI. The central feature of this database is the set of customer satisfaction indices provided by the Swedish Customer Satisfaction Barometer SCSB. The SCSB provides a uniform set of comparable customer-based firm performance measures and offers a unique opportunity to test the study's hypotheses.
The findings indicate that the association between changes in customer satisfaction and changes in productivity is positive for goods, but negative for services. In addition, while both customer satisfaction and productivity are positively associated with ROI for goods and services, the interaction between the two is positive for goods but significantly less so for services.
Taken together, the findings suggest support for the contention that tradeoffs are more likely for services. Hence, simultaneous attempts to increase both customer satisfaction and productivity are likely to be more challenging in such industries. Of course, this does not imply that such firms should not seek improvements in both productivity and customer satisfaction. For example, appropriate applications of information technology may improve both customer satisfaction and productivity simultaneously.
The findings should provide motivation for future research concerning the nature of customer satisfaction and productivity, as well as appropriate strategy and tactics for each one. It is worth emphasizing that this is an issue that is not only important today, but certainly will become even more important in the future. As the growth of services continues and world markets become increasingly competitive, the importance of customer satisfaction will also increase. To compete in such a world, firms must strike the right balance between their efforts to compete efficiently and their efforts to compete effectively.
1,382 citations
TL;DR: In this paper, a new typology for management control systems (MCS) is proposed, which is based on the distinction between decision-making and control and addresses those controls managers use to direct employee behaviour.
1,358 citations
Cites background from "The balanced scorecard : measures t..."
...…contain both financial and non-financial measures such as the Balanced Scorecard (BSC) (Greenwood, 1981; Kondrasuk, 1981; Ittner and Larcker, 1998; Kaplan and Norton, 1992, 1996a,b, 2001a,b; Malina and Selto, 2001) Reward/compensation Motivating and increasing the performance of individuals and…...
[...]
...…measures (Ittner and Larcker, 1998); non-financial measures; and finally hybrids that contain both financial and non-financial measures—e.g., the Balanced Scorecard (BSC) (Greenwood, 1981; Ittner and Larcker, 1998; Kaplan and Norton, 1992, 1996a,b, 2001a,b; Kondrasuk, 1981; Malina and Selto, 2001)....
[...]
...In more recent times the BSC, which is a comprehensive MCS with both financial and non-financial performance measures, has become quite dominant (Ittner and Larcker, 1998; Kaplan and Norton, 1992, 1996a,b, 2001a,b; Malina and Selto, 2001)....
[...]